Ramit Sethi is a New York Times best-selling author and creator of one of our favorite personal finance sites, I Will Teach You to Be Rich. In his weekly video Q&A, Ramit answers common questions about personal finance, careers, and more. This week: How can you get a credit card when you don't have a credit history?

Edgar from El Paso, TX, asks: "I'm just starting to build my credit history. I have a secured CC with a $500 limit and I've had it for 2 years and I've always paid it on time. About a year ago I called to see if they could give me an unsecured card instead. The answer was NO (for some BS-sounding reasons). How can I negotiate with them so they'll give me an unsecured credit card?"

I answer Edgar's specific question in the video above, but I wanted to highlight two things to know about using your credit cards.

More importantly, you're not building credit, which will cost you when you make major life purchases. For example, if you buy an average-priced house, the difference between what you'll pay with excellent credit vs. what you'll pay if you have poor credit is over $100,000. Building your credit is one of the few Big Wins you can have in your financial life.

If the credit-card company rejects you because you don't have credit, go for a secured credit card. These are essentially "starter" credit cards, where you put about $500 down as collateral, then slowly build your credit up. Over time, you'll graduate into a regular card. I explain the details of this in the video above.

#2. If you're on a secured credit card...

Since secured credit cards charge unnecessarily high fees and limit your credit, your goal is to move from a secured credit card to a standard ("unsecured") credit card, which will give you more flexibility and lower fees.
To do this, pay off your secured credit card every month — no exceptions. After 6 months, call the credit-card company and ask for an unsecured credit card. If they say no, ask what it will take to move to an unsecured card.

It usually takes 6-12 months to graduate to an unsecured card. Anything beyond that, I suggest you approach a different credit-card company and apply for an unsecured card with them.
Remember, there are a lot of credit card companies that would love to have your business. When you use your credit cards right, they are an interest-free loan with incredible rewards.
If you want to know how to take full advantage of your credit cards, I cover exactly how — including the word-for-word scripts to negotiate late fees, how to decrease your APR, and special perks that few people know about — in chapter 1 of my New York Times best-selling book. If you're interested, I'm making it available (free) to Lifehacker readers.

Ramit Sethi is a New York Times best-selling author who writes about personal finance, psychology, and careers. Learn the word-for-word scripts to negotiate your salary, lower your cable fees, and earn more money at I Will Teach You to Be Rich.

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